One Ethereum (ETH) rival that has experienced a significant surge of over 150% in 2023 is now losing momentum, as reported by crypto analytics firm Santiment. According to Santiment, the recent rallynof Solana (SOL) was mainly driven by the liquidation of short positions, and it may now start to run out of steam.
Santiment’s analysis suggests that the ideal time to have invested in Solana was during the second week of June when funding rates displayed bearish spikes. The presence of ultra-short funding rate spikes during this period would have presented a prime opportunity for investors to enter the market. Although prices can continue to climb without the liquidation of shorts, the probability of further increases is reduced.
The funding rate, calculated by dividing the funding payment by the average total snapshot position, provides insight into market sentiment. A funding rate above zero indicates a dominance of bullish sentiment, while a negative rate suggests bearish sentiment. Additionally, an increasing funding rate signifies bullishness, while a decreasing rate indicates bearishness. As of now, the Solana funding rate on Binance sits at a positive rate of 0.010%. However, in early June, the funding rate dropped to a negative value of 0.045%.
Furthermore, Santiment highlights Solana’s declining social dominance since the beginning of the year, which may indicate a lack of support for the current price level. Social dominance refers to the proportion of overall cryptocurrency discussion or activity attributed to a specific coin. The decline in Solana’s social dominance suggests that market participants are less engaged or interested in the token compared to earlier this year.
Solana’s price performance has been remarkable, with the token hitting a low of $8 in December 2022 and currently trading at $20.15. This represents a staggering 152% increase, making it one of the best-performing cryptocurrencies of the year so far.
It is important to note that Santiment’s analysis provides valuable insights into market trends, but investors should conduct their own research and exercise caution before making investment decisions.
In conclusion, Solana’s recent rally propelled by the liquidation of shorts is showing signs of losing momentum, according to crypto analytics firm Santiment. The best time to have bought into Solana was during the second week of June when funding rates had bearish spikes. However, the declining funding rate and social dominance of Solana may indicate a lack of support for its current price level. Investors should carefully analyze the market dynamics and perform thorough research before making any investment decisions.
